Maritime & Merchant Bank : Financial Report 30.06.2022

Maritime & Merchant Bank ASA

Financial Report

30.06.2022

Financial Report 30.06.2022

Table of Contents

FINANCIAL REPORT 30.06.2022____________________________________________________________ 2

STATEMENT OF PROFIT & LOSS___________________________________________________________ 11

BALANCE SHEET _______________________________________________________________________ 12

STATEMENT OF EQUITY _________________________________________________________________ 13

STATEMENT OF CASH FLOWS ____________________________________________________________ 14

NOTES 30.06.2022._____________________________________________________________________ 15

NOTE 1, REPORTING ENTITY _______________________________________________________________ 15

NOTE 2, GENERAL ACCOUNTING PRINCIPLES ____________________________________________________ 15

NOTE 3, FUNCTIONAL AND PRESENTATION CURRENCY ______________________________________________ 15

RISK_______________________________________________________________________________ 15

NOTE 4, RISK _________________________________________________________________________ 15

Risk Management and Capital Adequacy________________________________________________ 15

Capital Adequacy __________________________________________________________________ 16

Credit Risk ________________________________________________________________________ 16

Loss allowance ____________________________________________________________________ 17

Interest Rate Risk __________________________________________________________________ 23

Reference rates____________________________________________________________________ 23

Currency Risk _____________________________________________________________________ 23

Liquidity Risk ______________________________________________________________________ 24

Operational Risk ___________________________________________________________________ 24

INCOME AND COST __________________________________________________________________ 24

NOTE 5, TAXATION OF PROFIT ______________________________________________________________ 24

ASSETS ____________________________________________________________________________ 25

NOTE 6, FINANCIAL INSTRUMENTS AT FAIR VALUE. ________________________________________________ 25

NOTE 7, FINANCIAL PLEDGES ______________________________________________________________ 26

NOTE 8, OTHER INTANGIBLE ASSETS AND FIXED ASSETS _____________________________________________ 26

LIABILITIES _________________________________________________________________________ 27

NOTE 9, OTHER ASSETS AND FINANCIAL DERIVATIVES.______________________________________________ 27

NOTE 10, OTHER LIABILITIES AND ACCRUED COST_________________________________________________ 27

NOTE 11, SHARE CAPITAL AND SHAREHOLDER INFORMATION _________________________________________ 28

APPENDIX 1, ALTERNATIVE PERFORMANCE MEASURES _______________________________________ 29

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Financial Report 30.06.2022

Financial Report 30.06.2022

The profit for the period 01.01.22 - 30.6.2022 (H1 2022) before tax was USD 5 860 901 (USD 3 886 299 in H1 2021) and profit after tax is USD 4 395 676 in H1 2022 (USD 2 914 724 in H1 2021). The bank has no credit losses or distressed loans.

The Ukrainian-Russian war has continued with undiminished strength since the break-out in February this year and creates a most unpredictable picture of the world seaborn trade. Major supply chains are disrupted by sanctions and stop of production and are causing severe challenges in order to supply the world market with necessary food and energy products. Massive rerouting and re-location of commodities are taking place in order to replace the critical volumes.

As the short-term consequences of the above situation is mostly positive in terms increased of ton-miles for the shipping industry; the other major questions are however how the global economy will develop with steeply increasing raw material prices, continued supply challenges and not at least a global inflation threat. IMF has already warned us in their World Economic Outlook published in July and clearly dampening down the expectations for growth in global GDP (3.2%) as result of all the turmoil and unrest in the total picture. As always, it is difficult to predict the direct consequences for the shipping industry as such when trying to establish a scenario for the global economy. Short-term, as pointed above, we think there is a fair reason for expecting maintained good freight markets for container, drybulk and tankers. If we extend the horizon, the decisive factors will be how the inflation threat will be dealt with and how this will influence the demand and industrial production globally.

We expect that the strong interest for investing in shipping will continue, as we have seen during the first half of 2022. Our domestic market has been particularly strong, but we have as well seen an increasing number of enquiries from our clients in all the major shipping hubs in the world. More than ever, we need an adaptable world fleet in order to meet the challenges described and to contribute for ensuring food and energy security for the world.

The work for creating an emission-free international shipping scene is continuously reaching new interesting and concrete levels. The goals are ambitious and far-reaching (zero in 2050) and have indeed been brought even stronger into focus by the prevailing energy crisis. There are apparently three major tracks going forward; ammonia, hydrogen and methanol, all of them with respective advantages/disadvantages from operational and industrial viewing angles. The production, supply and distribution of new fuels are of course a major task, but peer owners have been front runners in contracting vessels suited for same and trust that the supply issues will be solved accordingly. It is all reason to applaud such brave steps and that this will be followed by further and that necessary incentives for doing same are given from relevant political and maritime authorities. In parallel to this development the international shipping industry will adapt to new rules and regulations ensuring the necessary CO2 emission reduction, primarily reflected in the EEXI regulation from January 2023.

We have a world scene in front of us with a series of uncertainties and challenges with a corresponding number of scenarios, however, we remain optimistic on behalf of our clients and the industry that we are serving. And by this, continue to build a profitable and sustainable bank.

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Financial Report 30.06.2022

Profit for the period (01.01-30.06)

The profit for the period before tax is USD 5 860 901 (USD 3 886 298 in 30.06.2021) and profit after tax is USD 4 395 676 (USD 2 914 723 30.06.2021).

Net interest income and related income totalled USD 9 894 992 (USD 7 064 141), and other Income (including financial derivatives and fixed income instruments) was USD 132 644 (USD 685 055).

Operating expenses before impairments and losses totalled USD 3 936 400 (USD 4072 722). The Cost/Income ratio came in at 39.3% (52.6%).

Loss allowance (Expected Loss) increased USD 230 336 (decreased USD 209 824). Credit Loss (Write Offs) was USD 0 (USD 0).

	2022	2021		2022	2021	2021
	01.04 - 30.06	01.04 - 30.06	01.01- 30.06	01.01 - 30.06		01.01 - 31.12
Interest Income	6 673 180	4 820 682		12 631 648	9 072 188	19 847 004
Interest Expense	-1 608 540		-1 072 094		-2 736 656		-2 008 047		-3 907 611
Net Interest Income	5 064 640		3 748 589		9 894 992		7 064 141		15 939 393
Other Income	302 401		163 183		132 644		685 055		333 203
Total Income	5 367 041		3 911 772		10 027 637		7 749 196		16 272 596
Operating Expense	-1 978 352		-2 087 155		-3 936 400		-4 072 722		-8 305 519
Operating Result	3 388 689		1 824 617		6 091 236		3 676 475		7 967 077
Loss Allowance	-62 604	18 557		-230 336	209 824	-16 682
Write Off (Credit Loss)
Sum Impairment	-62 604			18 557		-230 336			209 824		-16 682
Profit Before Tax	3 326 085		1 843 173		5 860 901		3 886 298		7 950 395
Tax	-831 521		-460 793		-1 465 225		-971 575		-2 857 044
Profit After Tax	2 494 564		1 382 380		4 395 676		2 914 723		5 093 351

Profit for the period (01.04-30.06)

The profit for the period before tax is USD 3 326 085 (USD 1 843 173 in Q2 2021) and profit after tax is USD 2 494 564 (USD 1 382 380 Q1 2021).

Net interest income and related income totalled USD 5 064 640 (USD 3 748 589), and other Income (including financial derivatives and fixed income instruments) was USD 302 401 (USD 163 183).

Operating expenses before impairments and losses totalled USD 1 978 352 (USD 2 087 155). The Cost/Income ratio came in at 37% (53%).

Loss allowance (Expected Loss) increased USD 62 604 (decreased USD 18 557). Credit Loss (Impairments) was USD 0 (USD 0)

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Financial Report 30.06.2022

Net interest income and related income

Net interest income and related income totalled USD 5 065 640 in Q2 (USD 3 748 589 in Q2 2021).

Net interest margin increased to 3.5% in Q1-2022 from 2.8% in Q2-2021. Increased lending and higher marked rates improved the Net Interest Margin.

Money market rates (daily average) in USD and NOK are on an upward trend caused by Central Banks hiking rates.

(Source: Infront, Maritime & Merchant Bank ASA)

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